Thursday, July 4, 2024 05:49 PM
NEPRA announces electricity rate hike due to capacity charges
- Consumers to bear increased electricity costs due to capacity charges
- Consumers subsidizing inactive power plants at a higher rate
- NEPRA approves positive quarterly adjustment for power companies
Image Credits: thefinancialdailyNEPRA raises electricity rates due to capacity charges, impacting consumers who subsidize inactive power plants. Quarterly adjustments approved for power companies.
The National Electric Power Regulatory Authority (NEPRA) has recently revealed a rise in electricity rates by up to Rs3.76 per unit. This adjustment is a result of a quarterly review, allowing power companies to recover over Rs46 billion from consumers for the third quarter of FY 2023-24. A significant portion of this sum, amounting to Rs28.515 billion, will be allocated as capacity charges to independent power plants (IPPs) that are currently non-operational.
Consumers who consistently pay their bills will bear the impact of these additional costs. The increased expenses are linked to past agreements made by the government to establish various power plants, with commitments to purchase the electricity generated. These agreements also involve payments to IPPs even when no electricity is being utilized from them.
Despite the surplus capacity available, the unused electricity from these plants is not being integrated into the national grid. Nevertheless, consumers are required to cover the expenses for this idle capacity. Due to the flawed agreements with IPPs, consumers are effectively subsidizing these inactive plants at a rate of approximately Rs17 per unit, significantly higher than the average electricity price of around Rs9 per unit.
NEPRA, in compliance with the relevant regulations, has officially announced its decision regarding the requests from XWDISCOs for tariff adjustments for the third quarter of FY 2023-24. The authority has sanctioned a total positive quarterly adjustment of Rs46.613 billion for the period spanning from June 2024 to August 2024.
Out of this total amount, Rs28.515 billion will be attributed to capacity charges, while Rs10.284 billion will be recovered due to reduced FCA impact of T&D losses, Rs5.309 billion for O&M, and Rs2.541 billion for use of system charges. Consumers will face charges of Rs1.90/unit, Rs0.9262/unit, and Rs0.9262/unit for June, July, and August 2024, respectively, across all consumer categories except lifeline consumers of XWDISCOs and K-Electric.
NEPRA's notification underscores the importance of entities such as Central Power Purchasing Agency Guarantee Limited (CPPAGL), XWDISCOs, and K-Electric adhering strictly to court orders while implementing this decision.
